Jan 23, 2013

Short term update

UPDATE 24.01 - always the same game push a move to the limit suck 99% of the traders and and catch them with the pants down:) The big boys are nasty guys they want your money.
The chart is looking bearish at least for the short term - bearish shooting star, SP500 touched the wedge trend line at 1503 and reversed,the histogram is pointing down now with divergences. Confirmation for a short term top is break below the last minor low at 1489. That is only several points from the current price so if this is for real the bears should show up and push it lower.

UPDATE: MACD divergence on the 15 min chart. If the bears manage to push it into the red into the close 1495 will be at least a short term resistance.

As expected the trend line on the hourly chart was slightly overshooted and SP500 touched 1495. There is no signs of reversal for now let see if the trend line will be a resistance.
Measured move 105 points or wave A=C, pick something:), points to target around 1500-1505 and around this levels comes the wedge trend line see the daily chart.
I must be honest and say I do not know if there is another 10 points up left. I was confident that we will see at least 1495. There is no reversal signs and wash out move on the upside is still missing so what are another 10 points:)


  1. Krasi, has your 9-13-9 sequence completed today? Is it time for a trend change yet? What is your outlook for TZA and SPXU? Thanks for your wonderful and informative blog.


    1. Hi, yes the 9-13-9 sequence is finished but that does not mean that we will see a reversal on the next day. You must be patient and wait at least for momentum reversal. If you use TD Sequential it will be a price flip or Technical analysis bearish candlestick and for example the histogram printing lower bar. There is already multiple divergences on the histogram and other signs that we should expect reversal so the odds are high that such momentum reversal will be the beginning of the correction.
      TZA and SPXU should follow the pattern of the indexes and if I am right that means correction in the next 4-5 weeks TZA~14-15 SPXU ~38-40

    2. That is a nice reversal:) wedge trend line touched, intraday reversal and bearish candle

    3. Krasi, you really think TZA can get back to 14 in 4-5 weeks? That would mean the RUT around 830. That would be quite a correction! Also, the guy at wavetrack thinks spx will correct to 1326. I think he's too bearish whereas the guy at thewavetrader is more realistic saying spx 1434 tops before heading back to 1500 again.

    4. TZA - the congestion zone now resistance where TZA spent a lot of time is 13,5-14,5.
      The move lower is 8 dollar - Fibo 38,2% is 3 dollar, 50% 4 dollar add this to 11. If TZA generates signal on the long side I will watch 13,5(the gap)-14,5 zone.

      wavetrack and target 1326 was my initial idea but I have abandoned it for several weeks. The move simply lasts too long and too high for that. But I like to have an alternate scenario I can always be wrong:)
      thewavetrader is what I expect to happen, 5% correction currently points to ~1425 on the SP500.
      thewavetrader is buy the way the only one which I found till now who can really count Elliot waves in my opinion.

  2. Krasi, are you saying there's going to be a correction based on EWT and cycles or technicals? I just can't think of any catalyst/event that will sell this market off. All economic news has been positive and with QE Infinity, markets will probably stay bouyant with minor dips. What do you think? Are you shorting this rally?

    1. Yes, I think that we will see a correction. Fundamentals are not important for me. You can interpret them different way, and timing is impossible. For swing trading forget it, for long term holding.. ok it makes sense. I can say that all this is well known and everything is priced in. QE Infinity for example you can say the Central Banks will flood with money the stocks cant go down and I can say everybody know that and its not relevant anymore.
      My take - the people vote with their money and you see it on the charts. I do not bother to analyze how the majority of the traders will interpret something.

      Technicals - indexes are overbought with divergences on some oscillators and market breadth indicators,the indexes are too far from MA50 on the daily chart, VIX at 11 etc.
      Cycles - this 20 week cycle should be shorter 14-15 weeks we are at 10 now.
      Seasonality is bearish usually January-March is correction period.
      TD Sequential 13 finished see the weekly chart - every time a correction has followed.
      EW - see the daily chart clear 3 wave move A-B-C and C=A
      I do not see something scary just normal correction in a up trend around 5% 1400-1420, because I see strength and I do not think that this is a major top. At major tops you do not see strength you see weakness

      No I am not shorting it right now. How a trader plays it, is another story. I am conservative and I like to see confirmation. We have strong move up why should I short it, it does not make sense. First of all there is no confirmation. All methods are aligned and are showing the same but the price still has not confirmed what I expect. Second the market has inertia after such move do not expect it to plunge right away this levels will be tested again(see the hourly chart) so I am not scared that I will miss something.
      So conservative trader - take half of the profits and wait for pullback and retest of the levels. If it moves higher you still have half of the position and you can add more if you want. If the retest fails and it starts moving lower again you can sell the other half of the position and you can short if you want.
      Low risk trading, missed something... not really. Most of the traders are scared to miss a move and try to enter a trade as early as possible but that is not important. The only important thing is low risk. If you trade with low risk you can trade more shares and make the same money.... no much more money compared to picking tops or bottoms. So why bother doing it:)

      The price is above MA50 on daily,hourly even on the 15min chart - should I short in that case... no way. I have tried to explain trend,momentum and trading signal as simple as possible in the post trading system...

      The post is a little bit long:) but the ideas are important - watch the charts everything is there, trade with low risk, you can make money even if you are wrong when you know how to trade.

  3. given that the demark 13 number was achieved this week on the weekly chart, when do u think a correction will begin based on prior completions? Has that always been the case dating back a few years or just most recently? Is this rally similar to the one in 2007? The rsi is very strong so I wonder if we'll ever get any pullback. What do u think of the wave count at pretzelcharts.com? He seemed to nail this rally...

    1. When I look at TD Sequential on the weekly chart the conclusion is the correction should start next week.
      Good question I am using TD Sequential for a year but I have counted backward on the weekly chart. I have found the chart for 2003-2007 bull market and it looks exactly the same way:)I will post it this weekend. On both charts there is one exception when the correction started several weeks later but that was in both cases at the begging when the bull was young and strong.

      But again to clarify I do not go long/short without price confirmation. Price is everything, but signal with confirmation from other methods have much more weight.

      2003-2007 and 2009-2013/4 are cyclical bull markets in a secular bear market so there are similar. If you ask about the end of the bull market 2007... I will compare the current rally with the first half of 2007. Toping process has not begun and the indicators are showing strength so I do not think that a major top is near there is some time left for this bull.

      Do not worry there will be a pullback. The indexes are too far from MA50 - look at DJ parabolic up. Such moves are in fact not bullish because they exhaust the buyers too fast. The next move is snap back to the MA50.

      I am not EW expert but my opinion is that every count with impulses for the move since 2009 is a joke. Look at pretzelcharts.com chart for example - boy you must have a lot of fantasy to see wave 1 and 3 as impulse. Count the mess as corrective waves and see how all fits and the proportions are perfect smaller waves a=c and the whole move w=y. He looks smart like many others which count impulses like Caldaro because they are on the right side:) nothing more.
      The Only EW guys which I follow are thewavetrader and marketthoughtsandanalysis you can find them in the Links section on the right side.
      And if you are interested you can read this http://marketthoughtsandanalysis.blogspot.co.at/2011/08/regarding-tops-and-sloppy-misleading-ew.html

    2. thanks for your thoughtful reply krasi. As a follow up, do most corrections you've studied always gravitate back to the MA50? What about the daily money pumps by the feds to keep markets bouyant? Have a great weekend. I took a small position in tza today. Rut still has very strong rsi but do think it is topping out. Is tza or faz in a descending triangle or a falling wedge in your opinion?

    3. In healthy trends the target is usually the MA50. The price does not spend a lot of time bellow it. Moving averages are like magnets for the price. Even if this move is very bullish there will be at least a pause several weeks so the MA can catch up with the price.
      I really do not know how the money flow trough the system, I am just trying to read the charts:)
      Everybody say FED is printing and I am asking when they control the situation where were they in 2002, in 2008, in May 2010, in September 2011....
      Its a falling wedge the chart pattern.